“In light of the tight limits on discretionary spending starting in 2012, your 2013 budget submission to OMB should provide options to support the President’s commitment to cut waste and reorder priorities to achieve deficit reduction while investing in those areas critical to job creation and economic growth,” OMB Director Jacob Lew wrote.

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OMB also wants agencies to identify programs that could help economic growth.

“Finding the savings to support these investments will be difficult, but it is possible if budgets cut or eliminate low-priority and ineffective programs while consolidating duplicative ones; improve program efficiency by driving down operational and administrative costs; and support fundamental program reforms that generate the best outcomes per dollar spent,” Lew wrote.

Agencies will need to address the new spending guidelines in both their 2013 budget requests and management plans, Lew wrote. The documents should:

“Identify and include in the budget submission cost-saving efforts that will improve operational efficiency and improve the rate of return to taxpayers, including more program integration, reorganizations within and between agency components, and realignment of resources (such as information technology, facilities, and staff) to improve service delivery to the public.”

Explain how agencies will “acquire, analyze, evaluate, and use data to improve policy and operational decisions, and how you will reallocate and strengthen your analytic and evaluation capacity to set outcome-focused priorities, identify the most effective and cost-effective practices and programs, and speed their adoption.”

The American Federation of Government Employees (AFGE) opposes the plan, saying it will hurt jobs.

“With 14 million Americans officially unemployed, and another 10 million who have either given up looking or are stuck with part-time work when they want and need full-time work, why on earth would the administration be trying to dig an even deeper hole?” AFGE President John Gage said. “Spending either five or 10 percent less in 2013 than we spent in 2011 on public safety, veterans’ services, law enforcement, anti-terrorism activity, and education support will not solve our problems – it will only make them worse.”

Congress still needs to finish work on appropriations for fiscal 2012, which begins on Oct. 1. The House has passed six bills, including measures for the Departments of Defense, Homeland Security and Interior. Both chambers have approved a measure for military construction and Veterans Affairs but are working out differences.